How Did Foreign Bank Lending Change during the Recent Financial Crisis? Evidence from a Very Comprehensive Dataset* Allen N. Berger Darla Moore School of Business, University of South Carolina Wharton Financial Institutions Center European Banking Center
[email protected] Tanakorn Makaew Securities and Exchange Commission
[email protected] Rima Turk-Ariss International Monetary Fund
[email protected] December 2015 Abstract Foreign banks are often accused of spreading or exacerbating the consequences of financial crises. Research is often handicapped by incomplete datasets – using aggregate or portfolio-level information or loans to publicly-listed borrowers only. Using data from 50 countries and over 18,000 individual loans before and during the recent global financial crisis, we examine foreign and domestic lending. We investigate both quantity and price effects, compare private and public borrowers, and include borrower characteristics and bank-borrower relationships. We find important differences in bank behavior when comparing U.S. versus non-U.S. banks and borrowers, public versus private borrowers, and relationship versus non-relationship loans. Keywords: Foreign Banks, Financial Crises, Bank Loans, Relationship Lending, Private and Public Firms JEL Classification: G01, G21, O16 * The views expressed are those of the authors and do not necessarily reflect the views of the Securities and Exchange Commission, the IMF, or of the authors’ colleagues at those institutions. The Securities and Exchange Commission, as a matter of policy, disclaims